Overcoming Debt Challenges

Good debt, bad debt or overwhelming debt? When your debt situation is escalating towards a crisis, it’s time to look at the reasons behind your current debt challenges and assess your ability to fix them.

Ask yourself, is the debt caused by external factors or is it self-inflicted? Is it an ongoing issue or a one-time event?

Common Causes of Debt
Helping out a family member Student loans Bad habits Medical expenses Poor money management
Large purchase or expense No savings Loss of job Over-borrowing Divorce
Living beyond your means Financial illiteracy Emergency Life event Accident or illness

Summarize Your Debt Challenges

Use the Liabilities: Detailed worksheet to complete a detailed summary of your liabilities, difficulties meeting your payment obligations and creditor actions against you. The worksheet has three parts: 
  • My Liabilities Summary
  • My Debt Challenges Summary
  • My Debt Challenges: Notes and Next Actions

Identify What You Need

Once you have a better understanding of the reasons behind your debt challenges and their magnitude, consider your options, e.g., debt repayment or debt relief, managing on your own or getting help from counsellors. Possibilities include: 

1. Remain in survivor mode  

Use the Government of Canada benefits finder to discover what assistance you may be eligible for, including compassionate care and family caregiver benefits.

2. Debt elimination plan

Create a debt elimination plan by following ProsperiGuide’s five-step process. Implement your plan using one or more debt reduction strategies.

3. Raise cash

Explore:
  • Taking on a second job
  • Asking a family member to contribute financially
  • Selling personal items
  • Selling a vehicle
  • Selling your house

Explore ways to subsidize your housing costs: 

  • Live elsewhere to reduce housing costs
  • Share costs; move in with friends or family
  • Earn rental income on part or all of your home
  • Have a family member pay rent

4. Get help

The reasons that caused your debt challenges will influence the type of help you need. Use the tools and resources found on ProsperiGuide if you need to improve your financial knowledge or money management skills.

Become an informed consumer before signing a contract for debt relief or debt reduction services. To research credit counsellors, trustees in bankruptcy and debt relief programs, visit Bankruptcy and Alternatives.

Do inquire if your employer has an employee assistance plan or covers financial, marital or emotional stress counselling, if these services are needed. 
 
Choose a plan of action with care and trust that you are doing the best you can. Accept that the road ahead may not be easy or the trip short. Know that the road to recovery is a necessary one and that your financial well-being depends upon you traveling it.